'Business as usual' for London's financial services industry

London Briefing: The only bomb that I can recall being near was the IRA device that exploded close to Harrods during the Christmas shopping season in 1983. "Near" is a relative term: I heard rather than saw the explosion that killed six people and injured 70.

If older Londoners can invoke their experiences of the second World War, my generation can at least recall the significance of the determination of Harrods to re-open within three days of the atrocity. Other bombings simply produced similar responses. "Business as usual" may be a cliché, but it carries a more powerful message than is sent by the bomber.

The world has admired London in its efforts to restore normality as quickly as possible. The mayor of Paris declared that "we are all Londoners now" and the French newspaper, Le Soir, admired the "calme et sang froid" displayed by many of the UK capital's citizens. Such fraternity between Britain and France is welcome as it is sadly too rare.

Less surprisingly, the Americans have been lauding their British cousins in many and various ways. One American commentator, Kevin Hassett of the American Enterprise Institute, in trying to explain the resolve of the Brits, observed with astonishment that when 43,000 civilians were killed in the bombing blitz of the second World War, admissions to mental healthcare facilities didn't rise.

Financial markets recovered more quickly after the London bombings than in the wake of 9/11 or Madrid because "traders remembered the astonishing character of the people who had been attacked".

The New York Times, in keeping with many other parts of the US media, remarked on Londoners' determination to "just get on with it". The ability of London Transport to restore a high level of service so quickly has not escaped some wry comments from people observing just how long disruption lasts following a bit of snowfall or a few leaves on the line. Nobody takes this kind of criticism in the wrong way, sensitivities have been lowered: humour is seen to be a part of the healing process.

Most of the people I spoke to over the past few days have expressed two simple emotions: anger and defiance. Defiance leads to the collective determination to restore normality.

And it is that use of the word "collective" that is most fascinating. It is at times such as these that Britain seems to be a cohesive, perhaps even coherent, place. If "business as usual" has been on everyone's lips, nowhere has the cliché been put more aggressively into action than in the financial services industry.

UK equities have been at the vanguard of a global summer rally that was only momentarily disturbed by the bombs. The Bank of England took the decision on interest rates that they would have taken anyway and equities quickly resumed their upward path. One of the lessons of the post 9/11 era is that economies are much more robust to these kinds of shocks than had previously been thought.

But that is not to say that they are invulnerable. The British consumer was not in great shape before the attacks. Sometimes, your ability to withstand shocks depends on how healthy you are to begin with. Nevertheless, few people seem to think that there is nothing wrong with the economy that can't be put right with a few cuts in interest rates.

The Bank of England's decision to hold monetary policy unchanged is unlikely to be a permanent state of affairs.

Equity markets are often said to be a form of opinion poll about the future - whether or not they are a particularly sophisticated, or accurate, poll is a moot point. Right now, stock markets are suggesting that the future is getting brighter. In a world of terrorist attacks, war in Iraq and ever higher oil prices this might come as a surprise. But stocks went up during the IRA's campaign and when the threat of nuclear Armageddon was at its highest.

As it turns out, they were right to take such an optimistic view of the future. Let's hope that stock markets have not lost their predictive powers.

• Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.